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JimDiGritz

Mse Poster Upset About Smi Overpayments

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I suspect its just a wind up. A pop at how the government overpaid mortgage help and to Northern Rock too.

I hoped in vain it was too, but it looks like an implausibly well constructed jape:

cj34 18-07-2009, 9:58 AM

Can I claim SMI?

Hi,

I have applied for SMI after 13 weeks of being on JSA, but I have a joint mortgage £208,000 with my dad, he pays nothing towards it and doesn't live with me. I use to earn £44,000 and he now still earns £21,000. Will I still be able to claim SMI even though he still has a job and is earning?

Although he pays nothing towards the mortgage technically it is joint, he is not just a guarantor.

Does anyone have any idea how much I would get?

I am getting very worried about paying the mortagage Northern Rock lost my SMI form twice therefore it has taken 8 weeks to submit the form, I have used up all my savings now.

Please help!

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If this person had applied themselves to their job as much as they appear to have applied themselves to the task of claiming back a small amount of interest which isn't even theirs then maybe they wouldn't have "lost their job due to the recesssion" in the first place.

With that attitude, the tw*t should be made to pay the taxpayer back the year's worth of interest payments.

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...who are the lenders advancing to these people ...he should be grateful for the amount repaid by taxpayers .?....who are the politicians supporting them with our money when they fail to understand the process ...?....don't just accept it .....get real..... :rolleyes:

Edited by South Lorne

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I don't know why I do it. It must be my guilty, masochistic pleasure - spotting "people that just don't get it" on MSE...

http://forums.moneysavingexpert.com/showthread.php?t=2747816

Brace yourselves.

I think he has a valid point. Regardless of what one thinks about SMI, the capital owing the bank is now £1000 less, yet the bank wants to charge the same nominal amount as it did when the amount of the loan was greater. He is being charged a higher interest rate than what is in his mortgage contract.

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I think he has a valid point. Regardless of what one thinks about SMI, the capital owing the bank is now £1000 less, yet the bank wants to charge the same nominal amount as it did when the amount of the loan was greater. He is being charged a higher interest rate than what is in his mortgage contract.

that's not how I read it - he is paying lower interest on a lower balance in his ortgage (unless they have annual and not daily reconciliation ofoverpayments in which case he has to wait for an annualanniversary for it to start having an effect), so he would be paying less interest, it's just that Northern Rock have not lowered his monthly payment.

On this basis, since he will be slightly overpayng compared to the interest going out, then he wil actualy be paying the loan off to a small degree.

Perhaps he can reduce his monthly payments back down to the new interest only amount, I suppose.

edit: did he actually say his monthly payments had or had not changed? a £1000 overpayment wouldn't make a great deal of difference tothe overall interest charged, maybe the issue is simply that he wants to get the £1000 out for his own uses?

Edited by Si1

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that's not how I read it - he is paying lower interest on a lower balance in his ortgage (unless they have annual and not daily reconciliation ofoverpayments in which case he has to wait for an annualanniversary for it to start having an effect), so he would be paying less interest, it's just that Northern Rock have not lowered his monthly payment.

On this basis, since he will be slightly overpayng compared to the interest going out, then he wil actualy be paying the loan off to a small degree.

Perhaps he can reduce his monthly payments back down to the new interest only amount, I suppose.

edit: did he actually say his monthly payments had or had not changed? a £1000 overpayment wouldn't make a great deal of difference tothe overall interest charged, maybe the issue is simply that he wants to get the £1000 out for his own uses?

This is the bit I was referring to, which seems to make it clear - NR are not giving hinm credit fot the extra £1000:

Northern Rock will not refund the money back to me as they say I did not pay it, they have credited it to my mortgage so my mortgage balance is now £1000 less, but they will not adjust my monthly direct debit to reflect the £1000. (I am on a interest only mortgage)

I have argued with them that as my balance has gone down by £1000 my monthly interest payment have to reflect that otherwise I am technically paying a higher interest rate than I should.

I am now back at work and due to pay the direct debit myself again, but they have refused to adjust my monthly interest payment, I don't understand how they will not consider the money to be mine, yet they can hold that money and earn interest on it for themselves. Technically the £1000 is in limbo as I would not see it unless I paid the mortgage off.

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This is the bit I was referring to, which seems to make it clear - NR are not giving hinm credit fot the extra £1000:

hi, unfortunately it does not make it clear

I'll qualify this by mentioning that I used to work developing database apps for a mortgage company, so I am familiar with the legalities and practicalities of how mortgage accounts are run

there are two separate transactions taking place:

(1) Northern Rock take interest out of the mortgage loan, debiting that amount from the overall mortgage balance

(2) Northern Rock take a direct debit from this chap's bank account of an agreed amount - this is CREDITED to the mortgage loan. On interest only this should be an equivalent amount to in point (1) and therefore the credit balances the debit on the mortgage loan account

these are 2 separate transactions. I would be very very surprised if interest taken (1) has not indeed reduced due to the lower balance of the mortgage by £1000, if they have not done so they would be breaking the law unless there is a clause associated with the govt overpayment. (Actually, there may be a contractual clause in his mortgage that does not permit overpayments so he may not get the interest benefit anyway, but that seems unlikely - it IS Northern Rock who seemed a bit dodgy)

however, depending on the T&Cs, Northern Rock seem to my mind more likely be able to get away with not reducing the direct debit in point (2), and they may be leveraging this technicality to their advantage to get some money back off someone who, afterall, is a higher credit risk having been out of work

in this scenario, even tho the mortgage was originally an IO, in practice he would be paying more than the monthly interest in his direct debit, so it might LOOK like he was being fleeced, but in reality, since the actual interest debited would be lower, then this would count as a slight overpayment.

does this make sense?

Edited by Si1

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I don't know why I do it. It must be my guilty, masochistic pleasure - spotting "people that just don't get it" on MSE...

http://forums.moneys...d.php?t=2747816

Brace yourselves.

I don't spend a lot of time on MSE, so I may be wrong, but it appears they have been forced to moderate the thread to deal with the wave of fury that it has generated.

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these are 2 separate transactions. I would be very very surprised if interest taken (1) has not indeed reduced due to the lower balance of the mortgage by £1000, if they have not done so they would be breaking the law unless there is a clause associated with the govt overpayment. (Actually, there may be a contractual clause in his mortgage that does not permit overpayments so he may not get the interest benefit anyway, but that seems unlikely - it IS Northern Rock who seemed a bit dodgy)

My reading of what he has written is that (1) has not reduced (see the last of the 3 paragraphs). It could be as you suggested, there is a possible clause not permitting overpayment - it is an IO loan and not a repayment loan and one can imagine that the associated packages they have sold on to investors only model redemption and not payment(?)

My understanding of what he has said is that Northern Rock is holding onto the £1000 overpayment and this will reduce the amount needed to clear the mortgage (say 199k instead of 200k), but whilst the mortgage is not cleared this £1000 is not generating any interest for the fellow with the mortgage - either directly, or indirectly through lowered interest charges on the capital (your 1) or overpayments (your 2). As you said, this is Northern Rock we are dealing with. I wouldn't thave thought one would get upset if he was getting implicit or explicit benefit from the overpayment.

Of course this relies on him understading the situation, having communicated it clearly, and me parsing what he has written correctly.

however, depending on the T&Cs, Northern Rock seem to my mind more likely be able to get away with not reducing the direct debit in point (2), and they may be leveraging this technicality to their advantage to get some money back off someone who, afterall, is a higher credit risk having been out of work

in this scenario, even tho the mortgage was originally an IO, in practice he would be paying more than the monthly interest in his direct debit, so it might LOOK like he was being fleeced, but in reality, since the actual interest debited would be lower, then this would count as a slight overpayment.

does this make sense?

This is plausible, but then his mortgage is no longer IO in the literal sense - with an extra couple of pounds being reduced from the capital each month due to effective overpayment. If that is the case and he is complaining then he should be shot. Of course it all depends what the terms of the contract are (IO may not actually mean IO in the naive sense) and whether or not he has understood everything that has been said to him.

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I'm mildly relieved that this SMI seems to be paid directly to the mortgage company/bank, rather than directly to the claimant like LHA is, as this must surely safeguard against a lot of SMI fraud.

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I'm mildly relieved that this SMI seems to be paid directly to the mortgage company/bank, rather than directly to the claimant like LHA is, as this must surely safeguard against a lot of SMI fraud.

It also lets the bank KNOW they have a defaulter on their books.

A penalty interest rate is likely if they have any more problems.

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My reading of what he has written is that (1) has not reduced (see the last of the 3 paragraphs). It could be as you suggested, there is a possible clause not permitting overpayment - it is an IO loan and not a repayment loan and one can imagine that the associated packages they have sold on to investors only model redemption and not payment(?)

My understanding of what he has said is that Northern Rock is holding onto the £1000 overpayment and this will reduce the amount needed to clear the mortgage (say 199k instead of 200k), but whilst the mortgage is not cleared this £1000 is not generating any interest for the fellow with the mortgage - either directly, or indirectly through lowered interest charges on the capital (your 1) or overpayments (your 2). As you said, this is Northern Rock we are dealing with. I wouldn't thave thought one would get upset if he was getting implicit or explicit benefit from the overpayment.

Of course this relies on him understading the situation, having communicated it clearly, and me parsing what he has written correctly.

This is plausible, but then his mortgage is no longer IO in the literal sense - with an extra couple of pounds being reduced from the capital each month due to effective overpayment. If that is the case and he is complaining then he should be shot. Of course it all depends what the terms of the contract are (IO may not actually mean IO in the naive sense) and whether or not he has understood everything that has been said to him.

indeed, the spectre of mis-selling arises...

I don't know who to feel sorry for anymore in this credit crunch mess

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.....

I don't know who to feel sorry for anymore in this credit crunch mess

I suggest then you feel sorry for no one. If people are stupid enough to buy a house at ten times their salary and use a loan that doesn't actually pay off the debt I personally find it a bit too hard to have any sympathy. Crazy borrowing by the masses was behind the '29 crash and its the same for this one.

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I used to make overpayments on my woolwhich mortgage but they would not do anything about adjusting monthly payments until september iirc. It seemed that they took the ammount off the capital and the monthly repayments remained the same (also being an overpayment by virtue of the reduced capital ammount).

Although, I never saw evidence of it in my statements and was never convinced that I wasn't being diddled by them.

They did manage to lose a couple of overpayments too which fortunately I had paying in slips for.

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I used to make overpayments on my woolwhich mortgage but they would not do anything about adjusting monthly payments until september iirc. It seemed that they took the ammount off the capital and the monthly repayments remained the same (also being an overpayment by virtue of the reduced capital ammount).

Although, I never saw evidence of it in my statements and was never convinced that I wasn't being diddled by them.

They did manage to lose a couple of overpayments too which fortunately I had paying in slips for.

the technicality if this - interest is either calculated annually on the last balance at anniversary date - and recalculated once a year as the balance reduces on an annual basis, so an overpayment won't contribute to lowering mortgage interest until that once a year recalculation is doen

OR, and this is the more modern way accomodated by better IT, they reclaculate the interest DAILY, so overpayments DO count immediately.

It is a matter of the individual mortgage contract.

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There has been a flood of new posts on that forum this week from people who can't sell their house and/or can't even get any viewings.

It is almost turning into Mumsnet IMPO now where they ask what is wrong with their house.

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There has been a flood of new posts on that forum this week from people who can't sell their house and/or can't even get any viewings.

It is almost turning into Mumsnet IMPO now where they ask what is wrong with their house.

It stinks of baby sick and dirty nappies .... well mine did :(

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It stinks of baby sick and dirty nappies .... well mine did :(

Do you not fill your house with those horrid machines that gas you with submission fumes each time you have a HPC thought?

My house doesn't smell of lilac flavoured chemicals pumped out by a little airwick machine every couple of minutes... I know so many people who have them though... They drive me mad! Your house smells of very little if it's clean - and even if it's dirty it won't smell as toxic as the chemical crap they pump into your lungs with those things...

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  • 261 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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